What is a Cash Flow

Team12 Business Consultant

What is a Cash Flow

What Is Cash Flow? 

The definition of cash flow is: 

Cash flow is the net amount of cash and cash equivalents being transferred into and out of a business. Cash received represents inflows, while money spent represents outflows. 

But I believe is the answer is in the name and is the flow of cash through the business which means that it is all cash to enter the business i.e., Sales, collections, and taxes, and all cash to leave the business i.e., purchase, sundry payments, and taxes, whether it be by bank or cash. 

It is important today that everybody keeps an eye on their cash flow whether it is your own personnel account or a business account and it is important that you have more than just one bank account. 

I will coach and teach people the methods and the importance of doing your cash flows. 

Cash inflows come from the three following sources: 

Operations. This is cash paid by customers for services or goods provided by the Business 

Financing activities. This is any payments made by the business for example goods purchased for resale, Salary and wages, utilities (electric, water, rates, and telephone), and other expenses (VAT, taxes, drawings, and other balance sheet activities) 

Investment activities. Funds like pensions, investments or dividends etc. 

What are the problems you can face if you do not operate a robust cash flow system? 

  1. Overspending 
  1. Overtrading/over stocking 
  1. Wrong payment terms 
  1. Cash shortage 

You could have a very successful business and doing high sales but still, run into major difficulties if you do not keep your cash flow in check. 

A cash flow statement is a way of ensuring that you can pay all your outgoings like a business and that your pricing is correct it also helps with planning and forecasting and will prove you are in control and will also show peaks and troughs, so you know when you need to source alternative means of finance.   

Contact me today if you need help with your cash flow 


My contacts are 


Skype: frank.pearson19 


Mobile/Whatsapp 07821026334 

Website. Team12.co.uk 


Frank Pearson 



Team12 Business Consultant
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